Slim Dusty sang of the lonesome, mournful and drear sight of a pub with no beer and the small New South Wales country community of Cudal is today finding that tune all too true.

Crime scene investigators are working to find out why the 1914 Royal Hotel which sits on the main street of the village went up in flames last night.

"It's really devastating for the town," says Lachie MacSmith a Cudal resident and Deputy Mayor of the local shire council.

"There was a bigger crowd there at the pub last night than I think I've seen for a long time."

Mr MacSmith says he was at his feedlot eight kilometres out of town when the blaze took hold last night but he could smell the smoke from that distance.

The faint smell of smoke remains in Cudal along with the remnants of fire fighting foam on the ground outside the gutted hotel as locals gather to take photographs and talk over the drama and the loss.

"It was a big part of the town. There's a lot of history there and a lot of photos. I went in last night and had a look and they were all burnt. It's pretty awful," Mr MacSmith says.

"Eugowra's [a nearby town] lost their pub and now this one's lost their pub and I don't know whether it will be rebuilt."

"With the drinking laws it may never open again."

While a licensed facility is also available at the town's bowling club, the pub has played a special role over the years as a meeting place for after work drinks, entertainment such as bands and as a headquarters for and sponsor of local sporting teams.

"They come here after training and they come here after a game. It's the centrepiece it's just where you go. In a small town if you play sport, you go to the pub," explains Mr MacSmith.

The sense of loss and the value of a small town pub has been echoed by the residents the ABC spoke to today all of whom had frequented the Royal.

"Many a time on weekends or afternoons after a hard day's work for a cold beer," says James Boswell.

"In a small town it's your place of meeting with friends or maybe an engagement or an acknowledgement of something that's been going well."

Like Mr MacSmith he's also sad about the loss of history pointing out that the building was probably one of the first to be built in the town and would have been used by farmers travelling a stock route.

Captain of the Cudal Rural Fire Service David Fardell was one of the first on the scene of the blaze.

"Extremely sad. It's a focal point gone, a lot of history gone up in smoke," he says.

"The pressed metal ceiling's all fallen in and the structural damage. The bar looks to be still intact but we don't know what the wood's like on top."

Locals say new owners had recently taken over the hotel and were trying to gather community feedback about how to revive the pub and provide suitable entertainment.

"We were looking forward to being a new hub for everyone to get together," says Rachel Griffith who says she first learnt about the fire on social media this morning.

The ABC has been unable to contact the owners of the Royal Hotel at Cudal.